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2024 (2) TMI 1150 - AT - Income TaxValidity of Revision u/s 263 - Admisibility of Deduction u/s 80P, Deduction from total income under chapter VI-A and business expenses - HELD THAT - AO has raised the issue on hand and has allowed the claim of the assessee after applying his mind on the issue. Thus, the contention of the ld. PCIT is nothing but making the review of the assessment under taken by the ld. FAO and PCIT intend to impose his view on the order passed by the FAO and the same is not permitted under the provisions of section 263. It is not the case that the ld. AO had passed the order without conducting any inquiries into the issue under consideration and specific details regarding the deduction claimed was called for the ld. FAO and therefore after he has taken a plausible view in the matter and allowed the deduction u/s. 80P(2)(d) claimed by the assessee. Thus the revisionary order thus cannot be passed merely to review the opinion formed by ld. AO for the reason that a higher authority does not concur with the view taken by ld. AO, without there being any substantive material in possession of such higher authority that has not been considered by ld. AO while forming such opinion. As decided in M/s Malabar Industrial Co. Ltd 2000 (2) TMI 10 - SUPREME COURT if the AO has adopted one of the two or more courses permissible in law and it has resulted in loss of revenue, or where two views are possible and AO has taken one view with which the CIT does not agree, it cannot be treated as an erroneous order and it is prejudicial to the interest of the Revenue, unless the view taken by the AO is totally unsustainable in law. Based on the discussion so record we are of the considered view that no action u/s 263 is called for in this matter once the ld. AO has already examined the issue which the ld. PCIT is pointing out in his order as submitted the assessee. This submission of assessee is fortified from the observations in the case of CIT Vs. Max India 2007 (11) TMI 12 - SUPREME COURT wherein held that phrase prejudicial to the interests of the Revenue in section 263 of the Income-tax Act, 1961, has to be read in conjunction with the expression erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of the AO cannot be treated as prejudicial to the interests of the Revenue. Even a bare reading of clause (a) to the Explanation 2 of Section 263(1) enables a deeming fiction for the CIT to treat the order of AO erroneous in so far as prejudicial to the interest of revenue if in the opinion of CIT the order is passed without making inquiry or verification which should have been made. This again substantiates that the assessee challenging the validity of Sec 263 is completely valid as in the present case the assessment order was passed after making due enquiry as well as verification from the assessee hence the CIT has no power to invoke the power provided u/s 263 - Appeal of assessee allowed.
Issues Involved:
1. Condonation of delay in filing the appeal. 2. Validity of the order passed under section 263 of the Income Tax Act by the Principal Commissioner of Income Tax (PCIT). Condonation of Delay: The assessee filed an appeal with an 8-day delay, citing the serious medical condition and subsequent death of the counsel's father as the reason. The Tribunal condoned the delay, referencing judicial precedents that advocate a liberal approach in such cases to promote substantial justice. The Tribunal found the reasons advanced by the assessee sufficient and condoned the delay. Validity of Order under Section 263: The Tribunal examined whether the order passed by the Assessing Officer (AO) under section 143(3) was erroneous and prejudicial to the interest of the revenue, as claimed by the PCIT. The PCIT had revised the AO's order, arguing that the AO failed to disallow deductions under section 80P(2)(d) for interest received from cooperative banks, which are not considered cooperative societies under the Income Tax Act. The Tribunal noted that: - The AO had conducted inquiries and considered the details submitted by the assessee regarding the deduction under section 80P. - The AO's view was a plausible one, permissible under the law, and the PCIT's action was essentially a review of the AO's decision, which is not allowed under section 263. - The AO had raised specific queries and allowed the deduction after due consideration, thus fulfilling the requirement of making inquiries and verification. The Tribunal cited various judicial precedents supporting the view that an order cannot be deemed erroneous if the AO has taken a permissible view after due inquiry. The Tribunal concluded that the PCIT's order was not sustainable as the AO had already examined the issue in question. Consequently, the Tribunal quashed the PCIT's order under section 263. Conclusion: The appeal of the assessee was allowed, and the order passed by the PCIT under section 263 was quashed. The Tribunal emphasized that the AO had made the necessary inquiries and taken a permissible view, and the PCIT's action amounted to an impermissible review of the AO's decision.
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